Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>Now we are getting more interesting. </p><p>Yesterday 10 May, Starwood Capital Group and its bidding entity 101 LPS raised its bid from ¥20,000/unit to ¥21,750/unit - an 8.75% bump - and lowered the minimum threshold for tender success from 5,344,355 units to 4,341,133 units or from two-thirds plus one share to about 55.27%.</p><p>I suggested on the 6th in <a href="https://www.smartkarma.com/insights/invesco-office-opposes-starwood-hostile-offer-and-gets-a-distinctly-beige-knight" target="_blank" data-smartkarma-citation="insights:51162" rel="noopener">Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight</a> that it was in Starwood's interest to respond to Invesco's new tactic of having the parent buy shares and do so early on. First was to ensure Invesco had to newly decide to pay more, and second was to make it clear they were paying up. There was an added aspect of them being able to not extend the end of the Tender Offer if they revised by the 10th, which they did.</p><p><strong>This changes things for investors. </strong></p><p>More discussion below the fold.</p><hr><p><em>The insights in this series are:</em></p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 76.5714px;"><h2>The Starwood - Invesco Office REIT Tussle</h2></td></tr>
<tr>
<td style="width: 76.5714px;"><strong>Date</strong></td>
<td style="width: 627.429px;"><strong>Title</strong></td>
</tr>
<tr>
<td style="width: 76.5714px;">5 Apr 2021</td>
<td style="width: 627.429px;"><em><a href="https://www.smartkarma.com/insights/starwood-targets-japan-s-first-hostile-reit-full-tob-for-invesco-office-j-reit" target="_blank" data-smartkarma-citation="insights:49976" rel="noopener">Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT</a></em></td>
</tr>
<tr>
<td style="width: 76.5714px;">8 Apr 2021</td>
<td style="width: 627.429px;"><em><a href="https://www.smartkarma.com/insights/starwood-hostile-reit-tender-launched" target="_blank" data-smartkarma-citation="insights:50112" rel="noopener">Starwood Hostile REIT Tender Launched</a> </em></td>
</tr>
<tr>
<td style="width: 76.5714px;">15 Apr 2021</td>
<td style="width: 627.429px;"><em><a href="https://www.smartkarma.com/insights/invesco-office-j-reit-responds-to-starwood-s-hostile-offer" target="_blank" data-smartkarma-citation="insights:50381" rel="noopener">Invesco Office J-REIT Responds to Starwood's Hostile Offer</a> </em></td>
</tr>
<tr>
<td style="width: 76.5714px;">23 Apr 2021</td>
<td style="width: 627.429px;"><em><a href="https://www.smartkarma.com/insights/starwood-rejection-of-extension-means-full-hostile-tender" target="_blank" data-smartkarma-citation="insights:50641" rel="noopener">Starwood Rejection of Extension Means Full Hostile Tender</a> </em></td>
</tr>
<tr>
<td style="width: 76.5714px;">6 May 2021</td>
<td style="width: 627.429px;"><em><a href="https://www.smartkarma.com/insights/invesco-office-opposes-starwood-hostile-offer-and-gets-a-distinctly-beige-knight" target="_blank" data-smartkarma-citation="insights:51162" rel="noopener">Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight</a> </em></td>
</tr>
</tbody></table>

Now we are getting more interesting. Yesterday 10 May, Starwood Capital Group and its bidding entity 101 LPS raised its bid from ¥20,000/unit to ¥21,750/unit - an 8.75% bump - and lowered the minimum threshold for tender success from 5,344,355 units to 4,341,133 units or from two-thirds plus one share to about 55.27%.I suggested on the 6th in Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight that it was in Starwood's interest to respond to Invesco's new tactic of having the parent buy shares and do so early on. First was to ensure Invesco had to newly decide to pay more, and second was to make it clear they were paying up. There was an added aspect of them being able to not extend the end of the Tender Offer if they revised by the 10th, which they did.This changes things for investors. More discussion below the fold.The insights in this series are:
The Starwood - Invesco Office REIT Tussle

Date
Title


5 Apr 2021
Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT


8 Apr 2021
Starwood Hostile REIT Tender Launched 


15 Apr 2021
Invesco Office J-REIT Responds to Starwood's Hostile Offer 


23 Apr 2021
Starwood Rejection of Extension Means Full Hostile Tender 


6 May 2021
Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight 



Starwood Bumps Terms, Lowers Threshold on Invesco Office

David Blennerhassett

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

<p>On 5 April, Starwood Capital Group launched a hostile Tender Offer on <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> to take over the J-REIT at ¥20,000/share, a 13% premium at the time.</p><p>It was the first hostile tender offer designed to take over a REIT in Japan. This was done without notice or warning. Invesco was not pleased. </p><p>For whatever reason, it took until the third day for the REIT to trade at terms. The "terms" were in fact ¥20,000/unit plus the ¥402/unit in expected dividends to be paid as of the end of the fiscal period ending 30 April 2021. It could actually come out higher if Invesco wanted to strip the REIT of excess cash but not a lot higher because leverage is pretty high.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/204/676/original/Screenshot+2021-05-06+at+7.54.23+PM.png?1620304651" class="editor-image img-responsive" data-smartkarma-image-id="204676"></figure></section><p>The arrows were my "bullish" (green), and "bearish" comments in prior insights. Given this is an arbitrage trade, the price moves and parameters required to flip are quite narrow. The last insight suggested buying back at 0.5% through ex-div terms, which is where the shares traded for much of the 28th and 30th of May (so investors should be long).</p><p>The units have traded at or above Terms+Dividend on all days since April 8. </p><p>Invesco responded by saying that it would reserve judgment on its Opinion Statement, but initially asked Starwood to lengthen the Tender Offer Period so Invesco could hold an EGM to get shareholder approval for the deal because if enough people accepted it, everyone else would get squeezed out without recourse to appraisal rights under the Companies Act because the squeezeout proposed was under the Investment Trust Act - itself a possibly illegal move.</p><p>Starwood rejected the proposal to lengthen the Tender, leaving Invesco with a legal fight and or White Knight option. </p><p>Insights to date are listed below.</p><table class="table table-striped"><tbody>
<tr>
<td style="width: 132px;"><h3>Date</h3></td>
<td style="width: 572px;"><h3>Insight Title</h3></td>
</tr>
<tr>
<td style="width: 132px;">5 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/starwood-targets-japan-s-first-hostile-reit-full-tob-for-invesco-office-j-reit" target="_blank" data-smartkarma-citation="insights:49976" rel="noopener">Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT</a> </td>
</tr>
<tr>
<td style="width: 132px;">8 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/starwood-hostile-reit-tender-launched" target="_blank" data-smartkarma-citation="insights:50112" rel="noopener">Starwood Hostile REIT Tender Launched</a> </td>
</tr>
<tr>
<td style="width: 132px;">15 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/invesco-office-j-reit-responds-to-starwood-s-hostile-offer" target="_blank" data-smartkarma-citation="insights:50381" rel="noopener">Invesco Office J-REIT Responds to Starwood's Hostile Offer</a> </td>
</tr>
<tr>
<td style="width: 132px;">23 April 2021</td>
<td style="width: 572px;">
<a href="https://www.smartkarma.com/insights/starwood-rejection-of-extension-means-full-hostile-tender" target="_blank" data-smartkarma-citation="insights:50641" rel="noopener">Starwood Rejection of Extension Means Full Hostile Tender</a> </td>
</tr>
</tbody></table><h2>The NEW News</h2><p>The NEW News out today after the close is that Invesco has officially <a href="http://www.invesco-reit.co.jp/file/en-news-a4c6e3cb798557f1ff9a03dad4e284e3b2495ada.pdf" target="_blank" rel="noopener">released</a> a Revised Opinion Statement which is AGAINST the Offer, and asks unitholders to not tender, and for those who have <em>already</em> tendered it asks such shareholders to withdraw their tender submission.</p><p>Furthermore, it notes that it has requested a Requested Party - Invesco Investments (Bermuda) Ltd (indirect holder of 3.06% of units outstanding) - to purchase units on the market so as to obstruct the Tender Offer by Starwood. </p><p>It is not a white knight putting out an opposing bid. It is, rather, an off-white knight - quite beige even - standing in while the price is is near the Tender Offer, with a buying power designed to absorb selling interest so that the selling interest does not tender.</p><p>This is a wrinkle. There are considerations. And more wrinkles. </p><p>Investors should consider carefully all the parameters. </p><p>I outline them below.</p>

On 5 April, Starwood Capital Group launched a hostile Tender Offer on Invesco Office J Reit (3298 JP) to take over the J-REIT at ¥20,000/share, a 13% premium at the time.It was the first hostile tender offer designed to take over a REIT in Japan. This was done without notice or warning. Invesco was not pleased. For whatever reason, it took until the third day for the REIT to trade at terms. The "terms" were in fact ¥20,000/unit plus the ¥402/unit in expected dividends to be paid as of the end of the fiscal period ending 30 April 2021. It could actually come out higher if Invesco wanted to strip the REIT of excess cash but not a lot higher because leverage is pretty high.The arrows were my "bullish" (green), and "bearish" comments in prior insights. Given this is an arbitrage trade, the price moves and parameters required to flip are quite narrow. The last insight suggested buying back at 0.5% through ex-div terms, which is where the shares traded for much of the 28th and 30th of May (so investors should be long).The units have traded at or above Terms+Dividend on all days since April 8. Invesco responded by saying that it would reserve judgment on its Opinion Statement, but initially asked Starwood to lengthen the Tender Offer Period so Invesco could hold an EGM to get shareholder approval for the deal because if enough people accepted it, everyone else would get squeezed out without recourse to appraisal rights under the Companies Act because the squeezeout proposed was under the Investment Trust Act - itself a possibly illegal move.Starwood rejected the proposal to lengthen the Tender, leaving Invesco with a legal fight and or White Knight option. Insights to date are listed below.

Date
Insight Title


5 April 2021

Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT 


8 April 2021

Starwood Hostile REIT Tender Launched 


15 April 2021

Invesco Office J-REIT Responds to Starwood's Hostile Offer 


23 April 2021

Starwood Rejection of Extension Means Full Hostile Tender 

The NEW NewsThe NEW News out today after the close is that Invesco has officially released a Revised Opinion Statement which is AGAINST the Offer, and asks unitholders to not tender, and for those who have already tendered it asks such shareholders to withdraw their tender submission.Furthermore, it notes that it has requested a Requested Party - Invesco Investments (Bermuda) Ltd (indirect holder of 3.06% of units outstanding) - to purchase units on the market so as to obstruct the Tender Offer by Starwood. It is not a white knight putting out an opposing bid. It is, rather, an off-white knight - quite beige even - standing in while the price is is near the Tender Offer, with a buying power designed to absorb selling interest so that the selling interest does not tender.This is a wrinkle. There are considerations. And more wrinkles. Investors should consider carefully all the parameters. I outline them below.

Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight

<p>On 5 April, Starwood Capital Group announced a hostile (no prior consultation) Tender Offer on <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> - the first hostile tender offer for full control of a REIT in Japan. </p>
<p>This was discussed in <a href="https://www.smartkarma.com/insights/starwood-targets-japan-s-first-hostile-reit-full-tob-for-invesco-office-j-reit" target="_blank" data-smartkarma-citation="insights:49976" rel="noopener">Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT</a> on 5 April and then <a href="https://www.smartkarma.com/insights/starwood-hostile-reit-tender-launched" target="_blank" data-smartkarma-citation="insights:50112" rel="noopener">Starwood Hostile REIT Tender Launched</a> on 8 April. </p>
<p>As happens with hostile tender offers, the price of the units moved through terms, but only after a couple of days' delay, which was somewhat surprising. </p>
<p>Shares are now trading 1.5% through terms when you include the dividend expected to be paid to unitholders as of the end of April 2021.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/202/275/original/Screenshot+2021-04-23+at+11.07.41+AM.png?1619147276" class="editor-image img-responsive" data-smartkarma-image-id="202275"></figure>
<p></p>
</section>
<p>On 15 April 2021, <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> brought out an official "Opinion Withheld" Opinion Statement pending answers to questions asked of Starwood. At the same time, the Investment Corporation <em>"strongly requested"</em> the Tender Offerors to extend the tender offer period to 60 business days - the maximum period stipulated under the Financial Instruments and Exchange Act - in order to enable it to hold a unitholders’ meeting prior to the expiration of the Tender Offer Period, <em>"so that at a minimum, unitholders of the Investment Corporation will be able to make a decision as to whether to tender their investment units in the Tender Offer based on sufficient information and consideration without coercion."</em></p>
<h3>The NEW News</h3>
<p>Starwood responded yesterday, and this morning, Invesco Office J-REIT <a href="http://www.invesco-reit.co.jp/file/en-news-460815e73927011b7be01530800ed5dc164b115b.pdf" target="_blank" rel="noopener">announced</a> that Starwood Capital Group had rejected the request to extend the Tender Offer Period. </p>
<p>This changes things somewhat. For both investors and for the players involved. </p>
<p>More below the fold. </p>

On 5 April, Starwood Capital Group announced a hostile (no prior consultation) Tender Offer on Invesco Office J Reit (3298 JP) - the first hostile tender offer for full control of a REIT in Japan. 
This was discussed in Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT on 5 April and then Starwood Hostile REIT Tender Launched on 8 April. 
As happens with hostile tender offers, the price of the units moved through terms, but only after a couple of days' delay, which was somewhat surprising. 
Shares are now trading 1.5% through terms when you include the dividend expected to be paid to unitholders as of the end of April 2021.




On 15 April 2021, Invesco Office J Reit (3298 JP) brought out an official "Opinion Withheld" Opinion Statement pending answers to questions asked of Starwood. At the same time, the Investment Corporation "strongly requested" the Tender Offerors to extend the tender offer period to 60 business days - the maximum period stipulated under the Financial Instruments and Exchange Act - in order to enable it to hold a unitholders’ meeting prior to the expiration of the Tender Offer Period, "so that at a minimum, unitholders of the Investment Corporation will be able to make a decision as to whether to tender their investment units in the Tender Offer based on sufficient information and consideration without coercion."
The NEW News
Starwood responded yesterday, and this morning, Invesco Office J-REIT announced that Starwood Capital Group had rejected the request to extend the Tender Offer Period. 
This changes things somewhat. For both investors and for the players involved. 
More below the fold. 

Starwood Rejection of Extension Means Full Hostile Tender

<p>Today after the close, <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> announced that it was asking Starwood Capital Group for an extension of their <a href="http://invesco-reit.co.jp/file/en-news-35995d013a64d08d52ee32686f3304893ec9a21e.pdf" target="_blank" rel="noopener">Tender Offer</a> (launched a week ago) to 60 days, made an announcement establishing a Special Committee with appointed committee members and related consultations, and posted a Notice Concerning Statement of Opinion (Opinion Reserved) regarding the Tender Offer by Starwood Capital Group.</p><table class="table table-striped"><tbody>
<tr><td colspan="3" style="width: 658.4px;"><h2>The Announcements</h2></td></tr>
<tr>
<td style="width: 412px;"><h3>Announcement</h3></td>
<td style="text-align: center; width: 104px;"><h3>English</h3></td>
<td style="text-align: center; width: 100.8px;"><h3>(日本語)</h3></td>
</tr>
<tr>
<td style="width: 412px;">Notice Concerning Announcement of Establishment of Special Committee, Appointment of Committee Members, and Consultation with Special Committee</td>
<td style="text-align: center; width: 104px;"><h2><a href="http://invesco-reit.co.jp/file/en-news-2c70a0c6dffb269f2c64a71eb15f82517d3cf72f.pdf" target="_blank" rel="noopener">👹</a></h2></td>
<td style="text-align: center; width: 100.8px;"><h2><a href="http://invesco-reit.co.jp/file/news-8686faaf81072b6debc86163c7b2d5a1ba067a72.pdf" target="_blank" rel="noopener">🤖</a></h2></td>
</tr>
<tr>
<td style="width: 412px;">Notice Concerning the Request for Extending the Period of Tender Offer by Starwood Capital Group</td>
<td style="text-align: center; width: 104px;"><h2><a href="http://invesco-reit.co.jp/file/en-news-e129ef9cb7bec54bf8b0832f567598e60986bc81.pdf" target="_blank" rel="noopener">👹</a></h2></td>
<td style="text-align: center; width: 100.8px;"><h2><a href="http://invesco-reit.co.jp/file/news-2f7322b260191843b2b34cf4a8288af54bdf9516.pdf" target="_blank" rel="noopener">🤖</a></h2></td>
</tr>
<tr>
<td style="width: 412px;">Notice concerning the Statement of Opinion (Reservation) on Tender Offer by Starwood Capital Group</td>
<td style="text-align: center; width: 104px;"><h2><a href="http://invesco-reit.co.jp/file/en-news-50106a4c6742e83a9d09be8b36a7ed1d3e29f2eb.pdf" target="_blank" rel="noopener">👹</a></h2></td>
<td style="text-align: center; width: 100.8px;"><h2><a href="http://invesco-reit.co.jp/file/news-71e691de7188cf83cece29a69c5eda33f40182ec.pdf" target="_blank" rel="noopener">🤖</a></h2></td>
</tr>
</tbody></table><p>It's an interesting response. It includes elements I had not expected but which are worthwhile. And the units are now trading 2.15% through Terms+Dividend.</p>

Today after the close, Invesco Office J Reit (3298 JP) announced that it was asking Starwood Capital Group for an extension of their Tender Offer (launched a week ago) to 60 days, made an announcement establishing a Special Committee with appointed committee members and related consultations, and posted a Notice Concerning Statement of Opinion (Opinion Reserved) regarding the Tender Offer by Starwood Capital Group.
The Announcements

Announcement
English
(日本語)


Notice Concerning Announcement of Establishment of Special Committee, Appointment of Committee Members, and Consultation with Special Committee
👹
🤖


Notice Concerning the Request for Extending the Period of Tender Offer by Starwood Capital Group
👹
🤖


Notice concerning the Statement of Opinion (Reservation) on Tender Offer by Starwood Capital Group
👹
🤖

It's an interesting response. It includes elements I had not expected but which are worthwhile. And the units are now trading 2.15% through Terms+Dividend.

Invesco Office J-REIT Responds to Starwood's Hostile Offer

Japan

Invesco Office J-Reit,Inc. is a real estate investment trust(J-REIT). The Compnay mainly invests in commercial and office building in metoropolitan area.

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Invesco Office J Reit (3298 JP)

Starwood Bumps Terms, Lowers Threshold on Invesco Office

Starwood has raised their Tender Price. This is now +19.9% vs Peer-Adjusted Undisturbed, and substantially closes the gap vs "IOJ Asset Market...

Travis Lundy

Last Week in Event SPACE: Singapore Press, Tabcorp, Invesco Office, Justbon, IHH Healthcare, JD.com

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight

Invesco Office rejects the Starwood Offer and asks a Beige Knight to buy shares in the market upping their stake during the TOB. It isn't...

Travis Lundy

Starwood Rejection of Extension Means Full Hostile Tender

Starwood Capital was asked to extend their not overly compelling hostile Tender Offer for Invesco Office REIT but refused. I expect Invesco to try...

Travis Lundy

Invesco Office J-REIT Responds to Starwood's Hostile Offer

Invesco Office J-REIT has now responded to Starwood's hostile offer in an interesting way. Units now 2% through terms. This isn't over. I think...

Travis Lundy

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